India has a unique advantage in its demographic dividend, unmatched by any other country in the world. To fully exploit this potential, it is essential to create jobs for young Indians. The Indian government has made job creation a central focus in the Union Budget 2024-25, announcing new schemes and allocating more money for skill development.
Job creation not only helps to accommodate the growing labor force, but also increases productivity, disposable income and purchasing power of individuals, which promotes overall economic prosperity.
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Huge boost for job creation
In her seventh Budget speech, Finance Minister Nirmala Sitharaman introduced three new employee-linked incentive schemes as part of the Union Budget 2024-25.
These initiatives, which are part of the Prime Minister’s package, aim to improve enrollment in the Employee Provident Fund Organization and emphasize support for new employees. They also provide assistance to both employers and employees.
Domestic brokerage Ventura Securities said: “Just as the PLI was a game changer for the manufacturing sector, we believe the Employment Linked Incentive package will boost employment in the country.”
HDFC Securities said, “The employment-related incentive scheme has the potential to create lakhs of jobs if implemented well and make India’s growth more inclusive. A number of initiatives in the areas of agriculture and rural development could continue to boost rural incomes and economy and have a trickle-down effect on the larger economy with some lag.”
The government aims to create around 4.1 crore jobs in the next five years. To support this ambitious target, ₹2 lakh crore has been allocated. A significant portion of the budget, ₹1.48 crore has been earmarked for training initiatives, with the aim of training 20 lakh youth in the next five years.
In addition, Sitharaman announced the upgrading of 1,000 industrial training institutes to better prepare the workforce with the skills required to meet the demands of the industry.
The Budget also announced several major initiatives aimed at boosting economic growth and inclusiveness. It increased the Mudra borrowing limits to ₹20 lakh of ₹10 lakh, which provides greater financial support to small businesses.
In addition, the corporate tax rate for foreign companies was reduced from 40% to 35%, a move aimed at attracting more foreign investors to set up operations in India. The abolition of the angel tax underscores the government’s commitment to fostering a more investor-friendly environment.
To increase women’s participation in the labour market, the budget includes provisions for setting up hostels for working women in partnership with industry and setting up crèches. In support of women-led development, the budget has more than ₹3 lakh crore for programmes to benefit women and girls, to promote greater economic and social empowerment.
“After several budgets focused primarily on infrastructure capex, the Union Budget for FY25 has broadened its scope. It aims to boost employment in the manufacturing and services sectors, expand rural consumption, improve financial penetration of MSMEs and promote the new direct tax regime,” SBI Capital Markets said.
Disclaimer: The views and recommendations expressed in this article are those of individual analysts. They do not represent the views of Mint. We advise investors to consult certified experts before making any investment decisions.
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